UK Property Market Outlook for 2022

3 Mins
January 5, 2022

The UK property market experienced high levels of growth in 2021 with prices increasing by up to 10.7%, but what does 2022 have in store?

2021 Property Price Growth

Property prices in the UK increased by 7.1% in the 12-months to the end of November, with the average property value increasing to £240,800 up £16,000 on the year before.

15.7 million properties in the UK experienced an increase in value of a minimum of £15,000. The increase in equity tend to prompt home buyers decision to move, further fuelling market demand.

Manchester & Liverpool Leading UK Price Growth

Manchester and Liverpool experienced the highest levels of price growth with Manchester prices increasing by 8.5% and Liverpool by 10.7%.

London experienced average property price growth of 2.8%, ranging from -1.8% decrease in the City of London to 5.9% in Bexley.

The North West region experienced some of the highest levels of regional growth, up 9.1%.

Property Price Growth Predictions for 2022

It is expected that Q1 2022 will continue to experience high-levels of buyer demand as buyers re-assess their living conditions and location, with more people working from home with flexible working looking to improve their lifestyle.

Buy-to-let property investors are also active in Q1 as they plan to buy their first investment property, expand their property portfolio and re-invest any gains for tax efficiency. Buy-to-let investors with property in London are also crystallising their investments by selling all or part of their holdings in London and investing into areas with higher levels of price growth forecast.

The Bank of England increased the base rate for the first time in three years from 0.1% to 0.25% in response to the rising levels of inflation. Mortgage rates for new deals have been adjusted, but mortgage interest rates still remain at a very low rate compared to historical averages.

Inflation is expected to impact on the levels of buyer demand and property transactions in 2022, however, there is a market imbalance with inflated buyer demand and decreased levels of supply, underpinning price growth for the year ahead.

Whilst 2022 isn't expected to see the same level of price growth experienced in 2021, areas with good levels of affordability are still expected to see growth of up to 4.5%. The UK is expected to see an average property price growth of 3.5%.

Where to Invest in Property in 2022?

The North West of England and Yorkshire and the Humber are forecast to lead property price growth in 2022, with 4.5% property price increases expected in both regions.

These are areas where property prices remain affordable and also benefit from high yields from rental income with cities such as Manchester and Liverpool experiencing the highest levels of property price growth in 2021.

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